Thursday, November 3, 2016

Here's Hoping "Cooler Heads" Will Prevail

That is, whoever wins this presidential election. Even so, admittedly it's a lot to wish for, given the tight strictures of today's general equilibrium circumstance, not just in the U.S. by any means but also, elsewhere. Consider what has occurred in this regard. Today, in order to function well in society, one needs some form of access to the economies of scale which have contributed to high expectations across the world. These expectations include an entry point which is primarily accessed by debt formation. And even as the debate continues to rage about low income access to credit, what is really needed is something that existed for centuries: access to wealth creation in incremental steps - steps which also made one's time value, an important component of wealth creation.

Economic time value in aggregate is all but forgotten as a primary component of wealth creation, not just in terms of the incremental asset formation one's efforts once made possible, but also our purposeful efforts to coordinate resource capacity with others. By far the most fragile aspect of an expert driven economy, is the forgetting, just how much these incremental forms of wealth creation have been responsible for worldwide prosperity.

How were these incremental efforts lost? Tradable sectors advanced economic progress, by taking advantage of the economies of scale that contribute to the production of product which exists separately from time and specific location. Whereas the non tradable sectors which depend on specific time and location, organized with an entirely different purpose in mind: supply side limits for wealth capture. Non tradable sectors defined economic access (production and consumption definition) according to whether one "merited" a connection to the benefits provided by economies of scale. Whereas tradable sectors generated more wealth by the creation of more product - thereby ultimately creating an inclusive capitalism, while non tradable sector activity gradually resulted in an exclusive form of capitalism.

Since the Republican party presently bears so much responsibility for defining the reach of wealth, the growing divisions between tradable and non tradable sector response to long term growth potential, have all but ripped this party apart. Whereas the first continues to seek prosperity, the second seeks prosperity to a point where it can be locally generated, then often proceeds to close the gates. Even though the latter has built much of its wealth via dependence on the global prosperity of the former! Meanwhile, in recent decades, Democrats also try to function in a dependent position to Republican dictates, even as Republicans are increasingly divided among themselves.

In the future, I cannot help but hope these arbitrary roles of wealth creation and dependence, will no longer be "assigned" to any political party. Nevertheless, that's the reality now, and it could take decades to overcome. Wealth creation needs to occur on broader terms, and in terms which do not divide family member from family member, neighbor from neighbor.

And even though meritocracy has its place in any economy, it is better suited for the short bursts of activity which lead to new and better tradable product formation, than for permanent assignments of time based product in non tradable sector activity. In the latter, meritocracy mostly leads to a world which becomes increasingly divided against itself. Much of the work that remains, is of a meritocratic nature which has become increasingly stressful. From a recent Atlantic article, "Living in an Extreme Meritocracy is Exhausting":

Indeed, the desire for an efficiency achieved through a never-ending gauntlet of approvals is unhealthy. It exhausts workers with the need to perform well at all times. It pushes them into a constant competition with each other, vying for the highest rankings that, by definition, only a few can get.

Inclusive capitalism is not about welfare states or access to credit. Inclusive capitalism is about the right to produce and to work with resource capacity what ever one's level of ability may be. So that as many individuals as possible, are able to remain responsible for themselves, and for others as well. It's easy to react to what is wrong in the world, especially when it appears that more is "wrong" than ever. Just the same, let's hope that cooler heads will prevail.